In the

United States Court of Appeals

For the Seventh Circuit

No. 12-3115

APEX DIGITAL, INCORPORATED,

Plaintiff-Appellant,

v.

SEARS, ROEBUCK & COMPANY,

Defendant-Appellee.

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division.

No. 1:09-cv-01452 — John W. Darrah, Judge.

ARGUED SEPTEMBER 10, 2013 — DECIDED NOVEMBER 20, 2013

Before KANNE, WILLIAMS, and TINDER, Circuit Judges.

KANNE, Circuit Judge. This suit was brought by Apex

Digital, Incorporated, to collect money for goods they sold to

Sears, Roebuck & Company. Apex alleged that Sears breached

their contract by refusing to pay the total amount it owed to

Apex for goods delivered. Sears argued that this action was

barred by the four-year statute of limitations set forth in

Section 2–725 of the Uniform Commercial Code (the “UCC”).

Both parties moved for summary judgment. The district court
2 No. 12-3115

found that Apex failed to file suit within the requisite time

period and granted Sears’ motion for summary judgment.

Apex filed this timely appeal. For the reasons set forth below,

we affirm the decision of the district court.

I. BACKGROUND

A. The Universal Terms and Conditions

Apex and Sears entered into the Sears Roebuck & Co.

Universal Terms and Conditions (the “UTC”) agreement on

September 12, 2003. The purpose of the agreement was to

allow Sears, a retailer, to place orders for goods with Apex, a

manufacturer of electronics. TheUTCcoveredallmerchandise 1

sold by Apex to Sears and “appl[ied] to, and is incorporated

into, all other Vendor Agreements.” The vendor agreements

were to “contain the entire understanding of [Apex] and Sears

with respect to the subject matter of such Vendor Agreements[.]” Furthermore, the UTC stated that the agreements

“may not be supplemented or modified by course of dealing,

course of performance, any oral communication between the

parties, or any responses by [Apex], ... unless such response is

in writing and executed or consented to in writing by Sears.”

According to the UTC, the vendor agreements and purchase

orders constituted a single agreement between the parties. 

Apex was in the business of purchasing products from overseas manufac- 1

turers and marketing and distributing these products in the United States

under the “Apex” brand name. These products included digital cameras,

televisions, DVD players, and other consumer electronics.
No. 12-3115 3

B. Payment of Invoices

Following the delivery of goods, Apex sent electronic

invoices to Sears. Though not explicitly written in the UTC, 

both parties’ records reflect a “Net 60“ payment term, meaning

payment was due sixty days from the date of the invoice. The

parties’ actions also indicate that they were operating under

this payment arrangement. Apex accounted for its invoices to

be due sixty days after issuance of each invoice. Sears’ Business

Exchange sets forth the payment terms between Sears and

Apex as “Net 60 Receipt of Goods.” 

Upon receipt of an invoice from Apex, Sears’ accounts

payable system confirmed the terms of the invoice and then

paid Apex according to the “Net 60“ payment term, though

Sears did not always pay the full amount owed. Sears withheld

money for expected returns and other deductions to which it

believed that it would be entitled in the future. Deductions that

weredisputedby Apex were labeled “charge-back deductions”

on Apex’s Invoice Report. Apex alleges that Sears owes

$11,940,758.05 in charge-back deductions. 

Apex also contends that Sears owes $3,029,028.00 in unpaid

invoices. The last invoices listed by Apex that remainoutstanding are dated November 9, 2004, and constituted the final

transaction between the two parties. Thus, according to the

“Net 60“ provision, these invoices were due no later than

January 8, 2005. All of the other invoices for goods that Sears

purchased from Apex pre-date the November 9, 2004 invoices.
4 No. 12-3115

C. The Return Reserve

On or about July 6, 2004, Sears implemented Program

Agreement 99671 (“PA 99671") to create a return reserve on

Apex’s account. The return reserve was an internal accounting

mechanism used to place a negative dollar deduction on

Apex’s account. In other words, Sears would hold back any

payment to Apex until the amount showing owed by Sears

exceeded the amount of the reserve.

D. District Court Proceedings 

At the summary judgment proceedings, Apex argued that

it was entitled to collect money it believed Sears owed on the

unpaid invoices and charge-back deductions. Apex alleged

that Sears owed $8,185,302.24. The complaint alleged that 2

Searswithheldmoney and stopped paying Apex for goods that

Apex delivered.

Sears asserted that Apex’s complaint was barred by the

four-year statute of limitations, as it was filed on March 6, 2009.

According to the “Net 60“ payment term, the latest expected

payment would have been due no later than January 8, 2005,

as the last invoice received was from November 9, 2004. Apex

maintained that the amounts in question could not have been

due earlier than January 2006 as Sears’ payments were advances against a debt. Apex also suggested that Sears’ payment

 Apex’s Invoice Report contains a positive dollar entry of $15,108,074.55

2

and $2,960,474.79 of merchandise return credits to be applied against the

sum for a net positive dollar figure of $12,147,599.76. Apex stated in its

Complaint that Sears was entitled to an additional $3,962,297.52 in credits,

leaving a total balance of $8,185,302.24. 
No. 12-3115 5

obligations were held open until Apex determined the full

amount owed through a final accounting that was to be done

once the business relationship ended. 

Regarding the deductions, the district court found that

Apex’s argument was contrary to the explicit language found

in the UTC, which allows Sears to unilaterally deduct from the

amount it owed on the invoices. Rather than making advance

payments to Apex, Sears paid each invoice separately and took

deductions as it deemed appropriate. Each invoice and

deductionwas itsown transaction. The last deduction occurred

on December 21, 2004, which is when the statute of limitations

began to run. Therefore, Apex’s March 6, 2009 complaint was

filed four years too late and barred by the statute of limitations. 

As for the unpaid invoices, Apex argued that the “Net 60“

term, taken from invoices, did not apply. It argued that any

change to the UTC had to be in writing by Sears and, since the

invoices were not signed by Sears, the “Net 60“ provision was

invalid. The district court concluded that while the UTC

addressed electronic payment of Apex’s invoices, it did not set

forth a specific time that payments would be due. Thus, the

parties’ course of dealing was able to supplement the written

agreement.

As a result, Apex knew or should have known that the

payment was due sixty days after the receipt of the goods.

Therefore, the district court found that the breach occurred no

laterthan January 8, 2005, and Apex’s March 6, 2009 complaint

was untimely filed and barred by the statute of limitations. 
6 No. 12-3115

II. ANALYSIS

A. Standard of Review

Summary judgment is appropriate when “the movant

shows that there is no genuine dispute as to any material fact

and the movant is entitled to judgment as a matter of law.”

Fed. R. Civ. P. 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322

(1986). We review the district court’s decision to grant summary judgment de novo, and generally will construe all facts

and reasonable inferences in the light most favorable to the

non-moving party. Arizanovska v. Wal-Mart Stores, Inc., 682 F.3d

698, 702 (7th Cir. 2012). Apex, however, failed to properly

respond to Sears’ statement of facts in support of its motion for

summary judgment as mandated by Northern District of

Illinois Local Rule 56.1. It states, “All material facts set forth in

the statement required of the moving party will be deemed to

be admitted unless controverted by the statement of the

opposing party.” N.D. Ill. R. 56.1(b)(3)(C); Midwest Imports, Ltd.

v. Coval, 71 F.3d 1311,1313 (7th Cir. 1995). Thus, we depart

from our usual deference towards the non-moving party,

Apex, and accept all of Sears’ unopposed material facts as true.

Johnson v. Gudmundsson, 35 F.3d 1104, 1108 (7th Cir. 1994).

B. Statute of Limitations

There is no dispute that Section 2–725 of the UCC, 810 ILL.

COMP. STAT. 5/2–725, governs the outcome of this suit. It states,

“An action for breach of any contract for sale must be commenced within 4 years after the cause of action has accrued.”

810 ILL. COMP. STAT. 5/2–725(1). The central issue is when the

cause of action accrued. Apex brings this cause of action for

breach of contract for failure to pay invoices and also maintains
No. 12-3115 7

that Sears owes for wrongful deductions it took when paying

the invoices.

1. Invoices

Apex argues that the UTC and PA 99671 demonstrate that 3

Sears’ payment obligations were advances against a debt and

payment was not due until after Sears’ final returns of Apex

products in 2006. According to Apex, a final accounting of

Sears’ and Apex’s business relationship was required and the

parties would settle any remaining debts at that unspecified

date in 2006. 

Apex seeks to disregard the “Net 60“ provision, notwithstanding the fact that the term is found in its own invoices.

Indeed, the parties operated throughout the course of their

dealings with the understanding that payment of invoices was

due sixty days from the date of the invoice. Apex argues that

the “Net 60“ provision is not a part of the UTC, as the UTC is

to embody the whole agreement between Apex and Sears and

“may not be supplemented or modified by course of dealing[.]” Supplementing the UTC with the course of dealing via

the “Net 60“ arrangement, Apex contends, contradicts the

explicit language in the contract.

 Apex contends that PA 99671, the return reserve that Sears used to hold

3

back money from Apex from July 6, 2004 to March 31, 2005, held open the

obligation to pay until the end of March 2005. PA 99671, however, was not

a part of the UTC or any agreement between the two parties. Rather, PA

99671 was an internal accounting mechanism that Sears put forth to place

a negative dollar deduction on Apex’s account. Apex was not privy to PA

99671, nor would it want to be; the whole purpose of PA 99671 was to

withhold funds from Apex.
8 No. 12-3115

Under Illinois law, “the objective in interpreting a contract

is to ascertain and give effect to the intent of the parties.” Gore

v. Alltel Commc’ns, LLC, 666 F.3d 1027, 1033 (7th Cir. 2012)

(quoting Carey v. Richards Bldg. Supply Co., 856 N.E.2d 24, 27

(Ill. App. Ct. 2006)). Our interpretation of the agreement is

guided by “the objective manifestations of the parties, including the language they used in the contract.” Id. Where the

language is plain, a contract should be enforced as written. Id. 

It is true that the “Net 60“ term does not appear in the UTC.

It is also true that the UTC prohibits supplementing or modifying the UTC without the express written consent of Sears,

which was never provided. And while the UTC mentions how

invoices are to be paid, there is nothing that indicates when

they are due. Thus, under the UCC, the contract may be

supplemented to give full meaning to the parties’ intent. In the

absence of explicit contractual language, we look to the parties’

conduct to establish intent. Capitol Converting Equip., Inc. v. LEP

Transp., Inc., 965 F.2d 391, 396 (7th Cir. 1992) (“Where, as here,

an agreement is silent on a particular term, a course of dealing

may fill the void.”). The “Net 60“ payment term was implemented by both Apex and Sears, in writing (on the invoices)

and through the course of their dealing. While the term may

not have been explicitly written in the UTC, the parties clearly

intended to operate under the “Net 60“ payment arrangement. 

Thus, payment was due sixty days after Sears received the

invoice from Apex. Sears received its last invoice from Apex on

November 9, 2004, which would render payment due on or

before January 8, 2005. After that date, Apex was aware that

Sears was not going to pay the invoice and the action was ripe

to bring suit. Once a party is apprised of a breach, the statute
No. 12-3115 9

of limitations begins to run. Kozasa v. Guardian Elec. Mfg. Co.,

425 N.E.2d 1137, 1141 (Ill. App. Ct. 1981) (“The statute of

limitations begins to run when facts exist which authorize the

bringing of an action.”). 

In accordance with the “Net 60“ payment arrangement,

Apex knew that Sears was not going to pay the invoice sixty

days from the date that it was issued. Thus, on January 8, 2005,

Apex had a legal right to demand payment from Sears.

Armstrong v. Hedlund Corp., 738 N.E.2d 163, 169 (Ill. App. Ct.

2000) (“When a creditor may legally demand payment from a

debtor, a cause of action accrues and the statute of limitations

begins to run.”). Yet Apex waited until March 6, 2009 to assert

its claim against Sears, more than four years after the alleged

breach occurred. Its claim is therefore barred by the statute of

limitations. 

2. Charge-back Deductions

Apex also alleges that Sears owes it for charge-back

deductions that date back to December 21, 2004. Apex noted

such deductions each time Sears withheld money from a

payment that Apex disagreed with. Again, Apex argues that

these deductions were not actionable at the time they were

taken; rather, a final accounting had to take place in order to

determine the final obligations of the parties. But the parties

were clearly operating under the “Net 60“ payment term and

therefore each invoice was being paid individually. Thus, each

deduction was actionable at the time it was taken. Hi-Lite

Prods. Co. v. Am. Home Prods. Corp., 11 F.3d 1402, 1408–9 (7th

Cir. 1993) (“Each partial breach is actionable and subject to its

own accrual date and own limitation period.”). Sears was not
10 No. 12-3115

making advance payments in anticipation of a final accounting.

Sears paid each invoice individually and decided for each

invoice how much money was to be deducted. It provided this

information to Apex and only sent the money that it believed

was owed.

As a result, Apex was put on notice that Sears was not

going to pay the deductions after each invoice. Apex even

marked these “wrongful” deductions in its own Invoice

Report. Nonetheless, for more than four years, Apex sat on its

right to sue for money that it was allegedly owed by Sears.

This is the precise behavior that Section 2–725 of the UCC

prohibits. Apex’s claim has expired and it cannot prevail

against Sears. 

III. CONCLUSION

Apex knew that Sears owed it money for goods, yet failed

to take any action for more than four years, placing its claim

outside of the limitations period set forth in the UCC as

adopted in Illinois. Accordingly, we AFFIRM the district

court’s granting of Sears’ motion for summary judgment.